Government and Regulators

We acknowledge the need of Canada and Alberta for us to obey all regulations and to proactively assist with the formulation of new policy that enables our company and our industry to better serve society.

Seven Generations conducts a comprehensive engagement program with governments and regulators by contributing to the progressive development and evolution of public policy and regulations that advance and improve society. We offer our well-developed expertise in the development of large-area, deep basin resource plays, where we harvest valuable energy from tight-rock and shale formations. While resource plays are not new to Alberta, there is an ongoing need for governments to advance and improve historical and conventional regulations to policies that are appropriate for unconventional natural gas development.

In the 1990s, Government of Alberta and industry focused their public policy, regulatory and economic attention on Canada’s oil sands, setting the foundation for prosperous growth well in advance of the investment boom that flowed into Alberta’s gigantic reserves of oil sands. The same need now exists in Alberta’s tight geological resources, and Seven Generations supports the development and adoption of regulatory improvements that fit the nature and characteristics of these promising energy resources.

For many decades, the Government of Alberta and provincial regulatory agencies have ranked among the world’s leading legislators and regulators of fossil fuel exploration, development and production. The development of tight shale gas and oil, which requires long horizontal wells and the installation of multiple hydraulic fracture stages, is as new to Alberta, as it is to the world. As part of a long established tradition, Alberta’s energy policy institutions are seeking public and industry input to create regulations best suited to tight gas projects such as the liquids-rich Kakwa River Project.

Seven Generations is an active participant in these initiatives and below are a sampling of issues that 7G is pursuing as a means to improving energy public policy and regulations:

Promoting Efficiency Through Project-Level Approvals

Like oil sands, successful tight gas projects take a long time to develop. It may take several years of investigation, evaluation and planning before a project application can be considered and filed with regulators. For companies to determine that there are sufficient energy resources in place to justify the up-front experimental cost, and that those resources hold the promise of generating commercial returns, patient investors are required. Seven Generations believes regulatory reviews and approvals of entire projects, each containing multiple wells, drilling pads, facilities and field pipelines, should bring new cost-savings to both government and industry. Rather than the current system of well-by-well review, regulatory assessment of overall project plans, along with public consultations, is more efficient for all participants – the regulator, companies and the most impacted communities. The efficiency savings of project-level approvals are expected to benefit Alberta in the form of stronger returns from the provinces resources.

Like oil sands, evaluation wells are required across the entire surface land of a project area to acquire sufficient data for resource assessment and planning. Under conventional oil and gas regulations, companies are typically required to drill each section of land to prove the existence of commercial quantities of oil and gas in order to retain drilling rights past the initial period of a permit, often five years. However, the extensive nature of large resource plays means such land-retention drilling is unnecessary, causes unwarranted land disturbance and is not the most efficient way to develop a field. Industry has a depth of experience that shows the most efficient method for developing large, unconventional reservoirs is with pad drilling that reaches deep under several sections at once. Development drilling from pads, each containing several wells, can be done with a very small surface footprint by employing established techniques to minimize surface disturbance and the environmental impact. Habitat conservation and wildlife benefit when the amount of land used for development is small, often a fraction of the overall project area. Seven Generations employs concentrated drilling of 30 or more horizontal wells from a single pad, which it calls Super Pads. Long wells also help reduce surface impact. With the horizontal section extending laterally through the Montney formation up to 3,000 metres (three kilometres), the surface disturbance is reduced by more than 70 percent compared to shorter wells that are about half that length. By employing longer wells, a fewer number of wells and pads are required to recover the liquids-rich natural gas. We encourage public policy makers to develop regulations that maximize the length of wells drilled, minimize surface impact, and avoid unnecessary land retention drilling. Improving land tenure regulations to fit the nature of large resource plays would reduce unrequired drilling and generate savings that are expected to benefit Alberta in the form of improved returns from the province's resources.

Tight Gas Reservoirs Require Concentrated Drilling

Like oil sands, the ability of the hydrocarbons to move within the reservoir is so low that wells must be drilled at very close spacing, compared to conventional oil and gas, to efficiently maximize resource recovery. Close spacing of wells within the reservoir results in a lot of wellheads at surface, which could result in extensive surface use and fragmentation of natural habitat with well sites, roads and pipelines. However, conventional oil and gas land tenure rules do not offer the most efficient opportunity to concentrate drilling and minimize surface disturbance. Advances in land-tenure regulations hold the potential to bring additional efficiencies to drilling and production methods that concentrate wells and production plants on pad locations.

Like Oil, Adopt Project-Area Production Measurement for Unconventional Natural Gas

The current system for unconventional natural gas production measurement requires continuous well-by-well rate metering, and Seven Generations believes that approach is not the most efficient, and encourages waste. Whereas, Alberta oil well production measuring is done on a collective basis at a central production facility, and individual wells are measured periodically. This is a more efficient system, and we encourage the regulator to apply oil production measurement techniques and regulations to unconventional natural gas fields, which would save time and money for both the producer, and the resource owner – Alberta, which would result in better returns on resources for the province.

Toward the objective of helping regulators and government officials understand Alberta’s new tight and shale gas resource plays, including the Kakwa River Project, Seven Generations' technical experts have made numerous presentations on the geology and engineering of these plays to government departments, and have encouraged regulatory changes. We have hosted regulatory and government officials on numerous field tours to help illustrate how progressive regulatory changes will benefit energy development for Alberta. We believe that this resource is as important to Albertans and Canadians as the oil sands, and that effective legislation and regulation requires a comprehensive understanding of how unconventional natural gas development compares to the conventional oil and gas business, and how applying some similar regulatory approaches that are already used in the oil sands will help maximize the value creation of unconventional natural gas for all Albertans.